I AM A SONIC BOOMER, NOT A SENIOR... In this blog, I am writing to and for those who believe that the Boomers will change what the word Senior means. I also believe that Boomers will change what retirement means in our society. The blog is also for those who are interested in what life after retirement may look like for them. In this blog I highlight and write about issues that I believe to be important both for Seniors and working Boomers.

Thursday, February 9, 2012

Now do you understand (A guide to world Economics)

Helga is the proprietor of a bar.

She realizes that virtually all of her customers
are unemployed alcoholicsand, as such, can no longer afford to patronize her
bar.

To solve this problem, she comes up with a new
marketing plan that allows her customers to drink now, but pay later.

Helga keeps track of the drinks consumed on a
ledger (thereby granting the customers' loans).

Word gets around about Helga's "drink now, pay
later" marketing strategy and, as a result, increasing numbers of
customers flood into Helga's bar. Soon she has the largest sales volume for any
bar in town.

A young and dynamic vice-president at the local
bank recognizes that these customer debts constitute valuable future assets and
increases Helga's borrowing limit. He sees no reason for any undue concern,
since he has the debts of the unemployed alcoholics as collateral!!!

At the bank's corporate headquarters, expert
traders figure a way to make huge commissions, and transform these customer
loans into DRINKBONDS.These
"securities" then are bundled and traded on international securities
markets.

Naive investors don't really understand that the
securities being sold to them as "AA" "Secured Bonds"
really are debts of unemployed alcoholics. Nevertheless, the bond prices
continuously climb!!!, and the securities soon become the hottest-selling items
for some of the nation's leading brokerage houses.

One day, even though the bond prices still are
climbing, a risk manager at the original local bank decides that the time has
come to demand payment on the debts incurred by the drinkers at Helga's bar. He
so informs Helga. Helga then demands payment from her alcoholic patrons, but
being unemployed alcoholics they cannot pay back their drinking debts.

Since Helga cannot fulfill her loan obligations she
is forced into bankruptcy. The bar closes and Helga's 11 employees lose their
jobs.

Overnight, DRINKBOND prices drop by 90%. The
collapsed bond asset value destroys the bank's liquidity and prevents it from
issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Helga's bar had granted her
generous payment extensions and had invested their firms' pension funds in the
BOND securities. They find they are now faced with having to write off her bad
debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing
the doors on a family business that had endured for three generations, her beer
supplier is taken over by a competitor, who immediately closes the local plant
and lays off 150 workers. Fortunately though, the bank, the brokerage houses and
their respective executives are saved and bailed out by a multibillion dollar
no-strings attached cash infusion from the government..

The funds required for this bailout are obtained by
new taxes levied on employed, middle-class, non-drinkers who’ve never been in
Helga’s bar.

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About Me

I was raised on Vancouver Island and in 1965, left to become a charter student of Simon Fraser University I graduated with a degree in Economics and Commerce in 1969; got on with life and then 25 years later graduated with my Masters in Educational Technology from City University in Seattle.

I started teaching in Surrey in 1973, but in 2000, I also started teaching at the University of Phoenix, Vancouver Campus. I became Area Chair for Curriculum and Instruction in 2005 but within four years, Phoenix closed its Vancouver Campus. I fully retired in 2012.

I served on the Board of SHARE Family & Community Services. The Society is a non- profit, independent, community based organization providing leadership and programs in response to the social needs of the residents of the Tri-Cities. I currently write a blog about issues important to Boomers as well as a blog about Personalized Gift Giving